Missing the woods for the trees
It is heartening to note that Punjab’s growth and development story and recent performance is being debated very seriously in Hindustan Times by prominent economists, policy analysts and policy-makers interested in the state’s well-being. This was long due and I am thankful to all those who have initiated it as it is only through debate and discussion that you understand the various facets of complex issues such as growth and development.Updated: Feb 03, 2015 10:52 IST
It is heartening to note that Punjab’s growth and development story and recent performance is being debated very seriously in Hindustan Times by prominent economists, policy analysts and policy-makers interested in the state’s well-being. This was long due and I am thankful to all those who have initiated it as it is only through debate and discussion that you understand the various facets of complex issues such as growth and development.
This kind of debate happened a few years ago, about Gujarat’s agricultural growth performance during the 2000s, involving well-known agricultural policy experts and policy-makers. It is one thing to dismiss such debates, dubbing all those involved as being argumentative Indians, or now in the case of Punjab as argumentative Punjabis, but it is another thing to value it as a platform for churning new ideas and seeking explanations for what has happened or not happened.
Growth insufficient for development
Issues of growth and development are complex, but it is also clear that the two terms do not denote the same thing as was seen in the context of the debate on Gujarat’s agricultural growth. Growth is important but not sufficient for development. Further, it is not growth per se but its composition which matters. This refers to examining in which sectors growth takes place as that determines which sections of population benefit and which are excluded. Therefore, besides examining the rate of growth of GDP (gross domestic product) and agri GDP at constant prices — in both of which Punjab lagged behind the national average during the 10th and the 11th Plan periods — it is important to examine its nature and contents.
Comparison of indicators
Punjab has also fallen in its ranking among major states during the past decade. But, it is important not to compare Punjab with other states such as Kerala and Gujarat as they have a different growth and development trajectory. Whereas Kerala has high development indicators, Gujarat is high only on growth. Also, Punjab does not have ST (Scheduled Tribe) population, unlike other states, which is generally much poorer. Therefore, comparisons with other states on poverty and other indicators are not valid. It is thus important to compare the state’s (Punjab) performance with its past performance, which shows that it is falling.
In Punjab, agricultural and rural sectors being significant for large sections of population and providing impetus to other sectors, one needs to examine the growth performance in these sectors. This can also show whether growth matters for development or can lead to development, as just producing more does not mean more development, measured in terms of incomes in the hands of people. If producing more wheat and paddy is also considered growth, then it may not mean much as these are low-value crops and do not lead to much net income, as is well known now. Further, if growth in the farm sector has been so high in the past decade or two, why has there been so much agrarian distress that the state had to constitute committees and provide relief for suicide-ridden families?
Just saying that there has been an increase in overall and rural consumption expenditure in Punjab does not mean it is not about living beyond means and there is no paucity of growth and development. Further, agro-industrial development is a natural corollary of agricultural development, with some lag, in a state like Punjab. The performance of this sector also does not show any significant growth and development.
No policy success
It is also important in this debate to recognise and assess the role of policy and institutions as they drive the speed and nature of growth and the type of development. Punjab has not seen any policy success in the past more than two decades in the field of agri and rural development. The diversification plan for the agricultural sector has been a complete non-performer until now. The state has failed to leverage the Union government funds for agro sector development, such as Nabard (National Bank for Agriculture and Rural Development) producer organisation development fund, Nabard warehouse fund, SFAC (Small Farmers’ Agri-Business Consortium) producer company equity grants and credit guarantee. The existing agencies and institutions are out of steam and non-local players are stepping in to cash in on opportunities, which is welcome but speaks volumes of the performance of local institutions.
The current agricultural policy of the state was framed and operationalised without much debate. The APMC (Agricultural Produce Marketing Committee) Act, which should have given momentum to the farm sector growth, has not been amended and the separate Contract Farming Act-based machinery has not been put in place even after more than a year of its coming into being. This is symbolic of institutional decline. No one talks of farmer companies in Punjab which are the happening entities all over rural India or of restructuring the traditional co-operatives for providing apparatus for growth and development.
In the age of market driven agriculture and agribusiness, state dependence is being perpetuated in every other way which is completely unsustainable. The crop diversification plan, depleting water table, and free electricity to the farm sector can’t go together. The free electricity to the farm sector goes against the very argument for crop diversification. Further, when it is larger farmers who devote higher proportion to paddy and wheat crops compared with small farmers, there is no logic in providing free electricity to all farmers irrespective of the farm size.
What state agenda needs
The rural youth need upgraded rural or semi-urban jobs around agriculture as entrepreneurs and employees, which is missing from the state agenda, which only focus on market-oriented agri production and value addition can generate. Volume and commodity-driven agri production systems with MSP (minimum support price) orientation of major crops perpetuates agro-industrial backwardness. Markets handle only quantity, not quality. Even cotton, one of only a couple of high-value crop in the cropping pattern of the state, is losing ground to paddy.
The state needs to encourage agro start-ups and institutional innovations within and outside the state sector. The state and its agencies need to gear up for more participatory and inclusive growth and development agenda, making the farm sector and agro industry take the lead in setting in growth momentum for development transformation of Punjab’s economy.
The writer teaches at the Indian Institute of Management (IIM), Ahmedabad. The views expressed are personal.
Tomorrow: Manoranjan Kalia, senior BJP leader and Jalandhar MLA
First Published: Feb 03, 2015 10:50 IST